The European Union has issued a warning to Microsoft, stating that the tech giant may face fines of up to 1% of its global annual revenue under the Digital Services Act (DSA) due to its failure to respond to a request for information (RFI) about its generative AI tools.
In March, the EU sought details from Microsoft and other major technology firms concerning the systemic risks associated with generative AI. Recently, the European Commission announced that Microsoft did not provide all the required documents. However, a revised press release from the Commission adjusted its wording, clarifying that it is intensifying enforcement efforts "following an initial request for information."
Microsoft has until May 27 to furnish the requested details or risk facing penalties. Under the DSA, fines can reach up to 6% of a company's global annual turnover. However, providing incorrect, incomplete, or misleading information in response to a formal RFI could lead to an independent fine of 1%, potentially amounting to billions for Microsoft, which reported a revenue of $211.92 billion for the fiscal year ending June 30, 2023.
The Commission directly oversees the systemic risk obligations for larger platforms, and this notification is part of a series of stringent enforcement measures that could have deeper financial implications for Microsoft than just reputational damage from failing to comply.
Specifically, the Commission is seeking clarification regarding risks linked to the generative AI functionalities of Microsoft's search engine, Bing, especially concerning its AI features such as "Copilot in Bing" and "Image Creator by Designer." The EU is particularly focused on potential threats these tools may pose to civic discourse and electoral integrity.
The deadline for Microsoft to submit the necessary information is May 27; failure to do so may result in a standalone fine of 1% of its annual revenue. Additionally, non-compliance could trigger ongoing "periodic penalties" of up to 5% of its average daily income or worldwide annual revenue.
In April 2023, Bing was classified as a "very large online search engine" (VLOSE) under the DSA, imposing additional responsibilities on it to address systemic risks, including disinformation. The DSA mandates that larger platforms mitigate the dissemination of false information, placing generative AI technologies in a critical regulatory spotlight—especially as tech giants hasten to integrate AI into their platforms, despite known issues such as large language models' propensity to generate misleading information.
AI-driven image generation tools have also been documented to produce biased or damaging outputs, including misleading deep fakes. With upcoming elections on the horizon, these concerns have heightened scrutiny in Brussels surrounding AI-assisted political disinformation.
In a press release, the Commission noted, "The request for information stems from concerns that Bing may have violated the DSA due to risks associated with generative AI, including 'hallucinations,' the widespread spread of deep fakes, and the automated manipulation of services that could mislead voters." The DSA stipulates that designated services, like Bing, must conduct adequate risk assessments and implement appropriate mitigation strategies, particularly in relation to generative AI risks identified in the Commission's electoral integrity guidelines, especially in light of the upcoming European Parliament elections in June.
A Microsoft spokesperson stated the company's commitment to ensuring safe online experiences and collaborating with regulators on this critical issue. "We have been fully cooperating with the European Commission regarding the voluntary information request and remain dedicated to addressing their inquiries while sharing details about our approach to digital safety and compliance with the DSA,” they commented. Microsoft added that the company has undertaken numerous actions to prepare its tools for the 2024 elections, aiming to safeguard voters, candidates, campaigns, and election authorities. Additionally, Microsoft plans to continue its collaboration with industry peers through the Tech Accord to Combat the Deceptive Use of AI in 2024 Elections.
This report has been updated to include Microsoft's comments and to clarify a change made by the Commission to its press release at 15h30 CET, which replaced an earlier statement indicating that Microsoft had not responded to its RFI. The revised statement reflects a more general observation that the Commission is increasing enforcement actions following the original information request.
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